Microsoft: Ladenburg Chartist Sees Upside to $45

By Tiernan Ray

Ladenburg Thalmann‘s Adolfo Rueda, the firm’s chief technical analyst, today published a chart piece noting new ratings on shares of Microsoft (MSFT), along with VMware (VMW), CA (CA), and Adobe (ADBE), all of which the firm rates Outperform, after not having an opinion on the stocks previously. The firm also cut its ratings on Citrix Systems (CTXS), Salesforce.com (CRM), and Symantec (SYMC) to “Not Rated” from a prior Outperform rating.

Rueda writes that investor sentiment on Microsoft is “too negative given the improving technical picture,” referring to the 23 Hold ratings on the stock and the 3 Sell ratings, versus 16 Buy ratings.

As Rueda explains the technical situation:

We are highlighting the weekly chart for MSFT and placing an outperform rating. MSFT was able to hold and bounce off of its intermediate-term trend in Sep. 2013. MSFT has recently taken out the top end of the six month base that started in Jun. 2013. It has also taken out its 2007 peak, in our view, bullish action. The breakout above the six month base (~$36.50) is a positive. We have annotated the six month base in the top chart as well as the multi-year base. MSFT is currently trading above its rising 50- day moving average and rising 200- day moving average. We believe current prices as well as slight weakness should be a good spot to add/buy. We are using $45.00 as the technical target while using $35.75 as a stop. The bottom chart is the relative price chart vs. the S&P 500. Relative price action versus the S&P 500 has been improving and has broken the dashed black downtrend line, in our view, a change in character. It is ranked in the 1st quartile.

Here’s the chart in question (click for larger image):

Microsoft shares today are down $1.10, or almost 3%, at $37.84, following reports this morning that Ford‘s (F) CEO Alan Mulally may not be taking over the top spot at Microsoft, contradicting months of speculation.

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.